JOHANNESBURG (Reuters) – The Bank of Ghana will cut its prime lending rate on Monday to ease pressure on the hard pressed economy following a gruelling three-year International Monetary Fund credit programme, a Reuters poll found.
Out of 10 analysts polled in the past three days, half predicted a 100 basis points cut to 20.00 percent while two pencilled in a cut of 50 basis points. Two more suggested a 200 basis point cut and only one said rates would stay on hold.
“Ghana’s authorities are likely to continue with their easing stance in an effort to boost productivity and reduce public debt servicing costs, which remains a major source of economic stress,” said Gaimin Nonyane, head of economic research at Ecobank.
The Bank cut its benchmark interest rate by 150 basis points to 21.00 percent in July, citing a downward trend in consumer inflation and the potential for higher economic growth on increasing oil output.
Ghana’s inflation – last recorded at 12.3 percent in August – is expected to average 12.5 percent this year and slow to 10.0 percent next year and then to 8.50 percent in 2019.
However, Rafiq Raji, chief economist at Macroafricaintel in Lagos said “rates are already way too high relative to the inflation outlook. To keep pace, the Bank of Ghana has to cut rates aggressively.”
Last month the IMF approved an extension of an aid package for Ghana, initially worth $918 million, that will see the programme continue for an extra year beyond its original April 2018 end date.